Following the disbursement of over $350 billion in American Rescue Plan Act funding to states and counties in March 2021, local governments are now looking to obligate and use any remaining funds before an upcoming December 2024 federal deadline.

Counties received lump distributions of federal funding to fill public revenue losses, invest in broadband and other infrastructure projects, and provide additional pay for essential workers, according to the U.S. Department of Treasury in a news release. Federal guidelines required ARPA funds to be obligated by December 2024 and spent by December 2025.

Three of the counties which received funding in the Houston area include:
  • Brazoria: $72.6 million
  • Harris: $915.5 million
  • Galveston: $66.5 million

Any funding not obligated by December 2024 and spent by the end of 2025 must be returned to the U.S. Treasury. This leaves counties facing the decision on how to use remaining funding and how to continue supporting pandemic-era programs and employees.

"You've got to find some other source to cover that cost. It's basic budgeting," said James Thurmond, a professor at the University of Houston's Hobby School of Public Affairs.

Counties such as Harris, Brazoria and Galveston could be faced with absorbing several million in additional costs or eliminating jobs or programs.

Zooming in

One of the major expenses counties may need to cover are employees funded by ARPA. In several counties, a number of employees were hired for positions on mental health teams, law enforcement and general infrastructure projects, such as a contract to expand the Harris County jail-based competency restoration program.

During fiscal year 2023-24 budget workshops, all three counties outlined how to spend the remaining funds on new projects and infrastructure efforts, while also considering the salaries which may need to be absorbed by the counties or eliminated once funding is depleted.

According to officials in each county, Harris County’s remaining funds are being targeted toward additional affordable housing efforts. Galveston County hired ARPA-related positions, such as a grant administrator and accountant. Brazoria County, meanwhile, has no current employees being paid using ARPA funds, spokesperson Sharon Trower said in an email.

What the experts say

Thurmond said that while local government officials have their reasons for choosing what to spend funding on, he believes they also have to be careful. The one-time federal payout was historic for counties and provided an easy way to fill budget holes without requesting additional tax dollars.

While ARPA funding was intended to help replace lost public sector revenue to counties, the responsibility of monitoring any budget deficits with county funds fell to the counties themselves.

“You just need to be aware when you create a new demand or a new service, is it sustainable with your current revenue? If it's not sustainable, then what do you cut? Are you going to create user fees, new taxes?” Thurmond said.

Stay tuned

During the FY 2024-25 budget workshops next year, officials with Harris County said they will need to discuss employee and program needs to determine whether positions and programs have to be cut or if they can be sustained on county budgets or grants.